Opening moves and a bad start!

 

As someone who spends most of my time in France I follow the movement of the Euro against the pound very closely and have been convinced, by the evidence of my own eyes down at the local supermarket that the euro is over valued against the £ and that a fall is due – which seems to be underway, what with the euro crisis still in full swing.

 

This makes my first bet an unusual one – I have shorted the GBP/EUR – i.e. betting that the Euro will rise relative to the £! I have done this as a short term bet, having looked at the charts and I have noticed that the £ is surely rising against the €, but it appears to have reached a point where there is likely to be a fall back.

 

I still think that the £ will continue to rise against the €, but I have been influenced by the reports of John Burford on the Money Week Trader free email which explain the use of “tramlines” as a tool for analysing trends in prices. (http://www.moneyweek.com/). I created some trend tramlines – one pair for the relatively recent past (April onwards) and another over a longer period (from mid 2009) both of these sets show the € value approaching the upper line. If the tramline trends continues there is likely to be a retrenchment, contained within both sets of lines and the opportunity for a short term profit. I have set a limit price of 12775 which would yield a profit of £35 – very modest, but I am remembering that the longer trend is up!

 

I set an order, at £1/pt, to open the bet, which was triggered at 12825 (£ buys 1.2825€) and set a stop loss of 35 points thus risking £40. Currently the bet is showing a profit of £13.70 and I have reduced the stop loss to 35 points. This may be a mistake in this volatile market and could loose me as much I stand to gain with the closing limit I have set.

 

I set another order to buy Vectura Group (VEC) at 69.5p at £10 a point –. This triggered nicely at 69.15 during an intra day mini plunge in the price although the bet is currently showing a £13.05 loss. Why Vectura? Lazy really, both Doug, on this site, and Robbie Burns (aka the “Naked Trader” – (www.nakedtrader.co.uk) have gone for this one and I am piggy backing their research and judgement. Stop Loss – 61.15 (max loss = £80), Limit sale target 83.15 (Profit target £140).

 

The GBP/EUR bet is on a daily rollover basis and the Vectura to expire in September.

 

As I post this entry a quick check reveals that the GBP/EUR position hit its stop loss of 35 points and lost me £35! Initially I had placed the stop at £40 points, but reduced it when the position was showing over £30 profit. Lesson reinforced – stick to your plan!